Mark Leonard and Jeremy Shapiro / Dec 2019
The world seems a less friendly place today than it did a few short years ago. Perhaps a global rules-based order was always an illusion, but today it seems a fantasy. Europeans now openly struggle to defend the multilateral institutions of the order and even their own interests against a broad array of threats. It used to be that Europeans were constrained by internal divisions, but when they decided to act together their voice counted in the world. The assault of the Trump administration on the Iran nuclear deal shows that today they struggle to advance their interests and values even in areas where they are united.
European freedom of action is constrained by many factors: Russia sows disinformation, China invests strategically, Turkey instrumentalises migration, Saudi Arabia leverages its energy resources. More painfully, the Trump administration has shown a willingness to leverage the centrality of the dollar and even the transatlantic alliance to restrict European sovereignty in areas where European and American policy differ. Other powers have proven ready to leverage their economic power for security gains, but the EU struggles to respond in kind.
The lack of sovereignty is increasingly costly for Europe—and it is not difficult to imagine even greater costs. If the U.S. treated European trade with Russia or China like it has treated Iran trade €191 billion per year (Russia) and €1 billion per day (China) would be at stake. Europe's cyber vulnerabilities already cost €400 billion a year. Artificial intelligence (AI) will contribute more than €13 trillion to the global economy by 2030, but Europeans do not treat this industry as a geopolitical asset so others will likely seize it.
Many European officials hope that a new, better American president or some other geopolitical miracle will enable a return to their imagined past. But hope is not a strategy—it is past time that the EU and its member states equipped themselves to compete in this geopolitical world. This is no easy task of course, which means the first step is to understand precisely what needs to be done.
The European Council on Foreign Relations (ECFR) is making that start. Working in consultation with eight EU governments and the European External Action Service, we analysed the external factors that constrain European freedom of action in the areas of security, economy, sanctions, multilateralism, hybrid threats, and new technologies. The study provides 56 concrete recommendations on how Europe can protect its independence to act and, more broadly, how the EU can consciously pursue a goal of "strategic sovereignty". The word ‘sovereignty’ implies that if Europeans have a clear and shared sense of what they want to do in the world they can achieve it independently. 'Strategic' refers to engaging in global competition and setting international rules rather than getting into the weeds of national life. In this sense, strategic sovereignty gained is from other great powers, such as China and Russia, not lost by member states to Brussels.
We will spare you all the 56 detailed recommendations – the top ten will provide you with a flavor of what must be done and the difficulty of the task:
- Foster a greater international role for the euro through deep and integrated capital and banking markets, creating a euro-area safe asset, and extending swap lines to partner central banks.
- Fight back against secondary sanctions through a stronger, more widely supported INSTEX, a beefed-up Blocking Regulation, and an office of Financial Sanctions Enforcement, similar to the U.S. Treasury's Office of Financial Asset Control.
- Establish a European investment screening system and empower the European Commission to recommend prohibiting foreign investments on security grounds.
- Rethink European competition policy and expand state aid control beyond EU companies. Europe needs to be home to some of the world’s major corporations.
- Leverage the EU's significant regulatory power on AI, establish shared, anonymised European databases for AI research, and an EU seal for ethical AI.
- Build a European pillar in NATO with concrete critical capabilities and a European 'level of ambition' in NATO with the goal of being capable of conducting some operations with very limited US support.
- Increase European forward-basing to tackle Europeans' credibility problem in Eastern Europe and establish a "Fort Charlemagne" in Poland.
- Develop a pan-European capacity to investigate sources of cyber-attacks and transform European Union agency for Cybersecurity into a more capable institution with centralised functions.
- Hedge against blockage of international institutions, agree emergency rules with other multilateralists on how to manage international arbitration if the WTO Appellate Body is blocked.
- Prepare Europe's institutions such as the European Investment Bank and the European Stability Mechanism to engage outside the EU and beyond their current mandates if necessary.
But of course, it is not enough to know what to do. Europeans also need capable institutions, both in Brussels and the member states that can implement such recommendations. Today, the fragmented European governance system for foreign policy means that Europeans have much less capacity to act than their competitors. Most geo-economic issues (such as trade or monetary policy) are accorded to European-level bodies, but most geopolitical issues (such as defense and relations with the United States) remain national prerogatives. If Europeans want to gain strategic sovereignty, Europeans will need to re-organise themselves both in Brussels and in national capitals better deal with the cross-cutting issues. Our study recommends some key first steps:
- Create a Strategic Sovereignty Committee within the EU Commission, under the command of the High Representative. It would oversee Europe's efforts to connect economics and security and come with a standing staff that would handle cross-cutting issues.
- An EU Task Force on Strategic Industries and Technologies to identify the strategically important industries of the future, while proposing limits on foreign investment and exceptions to state aid policies and competition policy, for approval by the European Council.
- A renewed push by the European Commission for member states to agree on their positions in key debates through qualified majority voting, particularly on human rights.
- An EU-level monitoring and best practice body for societal resilience to document societal vulnerabilities to external interference and recommend responses.
None of this is easy or uncontroversial, but much is at stake. The EU has the market power, defence spending, and diplomatic heft to end its vulnerability and restore the strategic sovereignty of its member states. But, unless it acts soon, Europe will be a pawn in the new power competition, not a player that can decides its own moves.